Crypto influencer and BitMEX founder, Arthur Hayes, has recently shared his position on US bank stocks with his 377,000 Twitter followers, claiming that he is shorting US bank-related stocks. According to Hayes, the brewing US banking crisis needs the US central bank, the Federal Reserve, to cut interest rates. He also condemned the US Federal Reserve’s expected 25 basis point hike (25 bps) on May 3, stating that it will only deepen the financial troubles of US banks.
Hayes has consistently shared his opinion on the US banking crisis and has criticized banks with Commercial Real Estate (CRE) loans on their balance sheet. As these loans become concentrated on the balance sheets of banks, these institutions become more sensitive to swings in CRE prices. Hayes has warned that unless the US Federal Reserve cuts interest rates, a few of the US banks facing similar troubles as FRC may not be around soon.
From Hayes’ list of banks, First Republic Bank and Signature Bank emerged as victims of financial troubles. Other key US banks on the list include Wells Fargo and Company, JPMorgan Chase & Co., and Bank of America, among others.
Hayes shared his insights on the matter via a Twitter post:
A few of these banks won't be around next Monday. Unless the Fed cuts rates and signals more cuts, or #banktermfundingprogram eligible collateral is expanded to any loan on a US federally chartered bank's balance sheet, it's goblin town!
— Arthur Hayes (@CryptoHayes) May 2, 2023
I got some puts last night. Yachtzee! pic.twitter.com/Ahe0fLqQ7C
Interestingly, Bitcoin prices rallied on Tuesday, climbing above $28,600 on the backs of banking failure and the decline in US equities. This shift in allegiance has given rise to an “inflation hedge” narrative, where capital rotates into Bitcoin when US equities suffer a decline in their prices.
Experts set a bullish breakout target of $35,000 for Bitcoin price, despite the fluctuations on the Bitcoin price chart. Adrian Zduńczyk, CMT, crypto expert, and trader set a technical breakout objective at $35,500, provided there is bullish momentum to sustain a persistent trend shift.
In summary, Hayes’ thesis is that rate hikes would deepen the US banking crisis, making more banks shut their doors for business due to their brewing financial woes. Meanwhile, the failure of more US banks could continue fueling the “Bitcoin is an inflation hedge” thesis and drive capital rotation into the risk assets sector.
